RBA Minutes from July meeting stated the Board agreed further rate cuts are warranted over time, while focus was on timing and extent of easing

Says:

• Board considered whether to leave rates at 3.85% or to cut by 25bps.


• Majority agreed it was prudent to await confirmation on inflation slowdown before easing.


• Majority felt cutting rates three times in four meetings would not be cautious and gradual.


• Case for no change cited some data, including on inflation, had been slightly firmer than expected.


• Job market had also not loosened as expected; less risk of severe global downturn.


• Members agreed monetary policy was modestly restrictive, though financial conditions had eased.


• Difficult to know how far rates can fall before policy is no longer restrictive, so prudence needed.


• Minority in favour of rate cut put more weight on downside risks to economic outlook and inflation.


• Case for cut cited evidence inflation was on track to mid-point of target band, if not lower.


• US tariffs would be a drag on world growth and thus Australia, where GDP is already subdued.


• Unsure whether market sector employment would pick up as non-market sector slowed.


• Outlook for global economy highly uncertain and US trade policy is unpredictable.

Reaction details (02:37)

• Muted reaction seen across Australian asset classes.

Analysis details (02:36)

As a reminder, the RBA surprised markets by pausing on rates at the July meeting amid wide expectations for a 25bps cut, with the decision made by a majority of 6-3 votes and it stated that the Board will be attentive to the data and evolving assessment of risks to guide its decisions. RBA also stated that inflation has continued to moderate and the outlook remains uncertain although the Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong. Furthermore, the Board remained cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply and it judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis. RBA Governor Bullock commented at the post-meeting press conference that there will be more data and news by the next meeting, as well as noted that they had made good progress on inflation. Bullock also said she is confident they are on a path to ease further, although timing is the question and can expect rates to decline if inflation slows as expected.

22 Jul 2025 - 02:31- Fixed IncomeData- Source: Newswires